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Danish drugmakers' "no" to Greek price cuts
  01 June 2010
Danish drugmakers Novo Nordisk and Leo Pharma have announced that a number of their medicines will no longer be sold in Greece, following the government's decision to cut drug prices by 25%.
The price cuts form part of the Greek government's attempts to deal with the nation's massive debt crisis, imposed in return for a bail-out package worth 100 billion euros pledged to Greece by the International Monetary Fund (IMF) and the eurozone member states last month.
Novo Nordisk was first to reject the price cuts, stating that it will withdraw supplies of 17 of its most advanced products on a temporary basis. The firm has refused to implement the price cuts on its modern insulin products and those administered through pen injection systems and, as a result, wholesalers have stopped ordering them; it will however continue supplying human insulin products in Greece at the new lower prices. Then on May 30, Leo Pharma reported that it had issued a Notification Letter of Discontinuation concerning the potential withdrawal of 18 of the company's 29 products currently sold on the Greek market, although it stressed that it would ensure alternative treatment options for Greek patients are provided by its remaining products.
Leo remains "in dialogue with the Greek authorities to find an alternative solution" to withdrawing its products, and says it "firmly" believes that a solution is achievable. However, it adds that, given the imposed price cuts, "we see no other solution than to withdraw some of our products from the Greek market, as a price reduction on our products of up to 27% will have severe consequences on our total business, including long-term investments in R&D to the benefit of patients worldwide."
Moreover, the firms point out that as Greek drug prices are used as reference by other European countries - including the Czech Republic, Hungary, Italy, Portugal, Romania, Spain and Turkey - the Greek cuts could have a knock-on effect in these markets if they fail to act.
Leo adds that, even before the reductions, prices of 20 of the 29 products which it sells in Greece were the lowest in Europe. "On the remaining nine products, the prices are second or third lowest compared to other low-priced European countries," it says.
On May 31, government officials responded, accusing the firms of blackmail and pointing out that a number of their products have market monopolies. Given that Greece is one of Europe's three most expensive markets for medicines and that manufacturers have reaped considerable profits there for decades, they now have an obligation to accept the price cuts, according to the Ministry of Economics' director general, Stefanos Combinos.
However, drugmakers have applied to the country's supreme administrative court, the Council of State, to have the price reduction measure overturned.
Meantime in other developments, drug and medical equipment suppliers have rejected a proposal put forward by the Greek government to pay back the 5.6 billion euros which the firms are owed by the public hospital sector.
On May 28, the health and finance ministries said they would, immediately and in cash, pay off debts totalling 230 million euros dating from 2005 and 2006, and would finance the vast majority of debt through a series of bonds, the last of which would be issued next January 1.
However, suppliers have rejected the proposals, claiming that they will force them out of business and pointing out that the high prices of their products are the result of frequently having to wait for years to be paid by the state for their products. The unreliability of payment has also led to them being denied funding from the banks, they add.
Novo Nordisk is owed 24.4 million euros by the state hospital sector, and the debt to Leo is around 37 million euros.
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